Running a restaurant presents a challenging recipe for owners

You have to wonder, do folks who own restaurants feel like they have a target on their back? I’ll explain.

Restaurants are big business. As reported in a University of Central Florida study, “According to the National Restaurant Association (2009), total revenues for the restaurant industry exceed $580 billion with nearly 1,000,000 operating restaurants in the U.S.; providing jobs for over 13 million people.” Pretty impressive, huh? So, this must be a recipe for success, right? Not necessarily.

Contrary to popular belief, restaurants don’t necessarily fail more often than other types of businesses. But, according to a Cornell University study, more than 60 percent of them don’t survive to their fifth year. So, clearly keeping one going long-term is trying.

And, of course running a restaurant is so easy. All you have to do is get up every day before everyone else, work endless hours on your feet and endure criticisms from your customers. You restaurant owners have this delightful working environment, to say nothing of the joys of dealing with landlords, fighting with suppliers and kowtowing to the health department inspectors.

Add to this mix: trying to keep employees happy and satisfying the myriad of state and federal labor laws.

Both the Darden Restaurants chain (owners of Olive Garden, LongHorn Steakhouse, Red Lobster and others) and Brinker International Restaurants (owners of Chili’s, Maggiano’s and Romano’s Macaroni Grill) know firsthand the burden of juggling these challenges.

Darden was recently hit with a class action lawsuit, alleging that the restaurant chain paid its employees below minimum wage. Darden already has paid close to $100,000 to the Department of Labor, which had investigated similar claims in Texas.

Now it must defend itself against allegations that, across all of its brands, employees who reported to work were told to not clock in until customers arrived; that the workers were not paid earned overtime; and, that several were not paid even minimum wage. The costs of merely defending the case will run into the millions. That, of course, is to say nothing of how much it will cost to settle the case.

Fortunately for Brinker, it has a slightly happier story to tell. It’s been battling a long-running class action lawsuit here in California. The plaintiffs (current and former employees) accused Brinker of denying them their state-mandated meal and rest breaks.

Brinker’s argument was that it provided its employees with the opportunity to take the various breaks but that they continued to work instead. The old, “You can lead a horse to water but you can’t make it drink” defense.

It seems that at least some of the workers didn’t want to take a 10-minute break in the middle of mad lunchtime rush (especially if the break would impact how much the worker makes in tips). However, the plaintiffs said offering the breaks was not enough. The employer must essentially force its workers to take their breaks and discipline those that fail to do so.

The case went all the way to the California Supreme Court in a highly anticipated decision. The court came down on the side of common sense. “The employer satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so.”

However, lest you restaurant owners rest too easy, the Supreme Court went on to say, “What will suffice may vary from industry to industry, and we cannot in the context of this class certification proceeding delineate the full range of approaches that in each instance might be sufficient to satisfy the law.” Certain fodder for future litigation.

So, don’t envy the restaurant owner. He has a lot more on his plate than you realize.

Carl Kanowsky of Kanowsky & Associates is an attorney in the Santa Clarita Valley. He may be reached by email at cjk@kanowskylaw.com or online through his law firm at www.kanowskylaw.com. Kanowsky’s column represents his own views, and not necessarily those of The Signal. Nothing contained herein shall be or is intended to be construed as providing legal advice.